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Marketing 12e - Pride and Ferrell
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Marketing 12e - Pride and Ferrell



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  • 1. 17 Retailing and Direct Marketing
  • 2. Objectives
    • To understand the purpose and function of retailers in the marketing channel
    • To identify the major types of retailers
    • To understand direct marketing and two other forms of nonstore retailing
    • To examine major types of franchising and the benefits and weaknesses of franchising
    • To explore strategic issues in retailing
  • 3. Chapter Outline
    • The Nature of Retailing
    • Major Types of Retail Stores
    • Direct Marketing
    • Other Types of Nonstore Retailing
    • Franchising
    • Strategic Issues in Retailing
  • 4. The Nature of Retailing
    • Retailing
      • Transactions in which ultimate consumers are the buyers
    • Retailers
      • Organizations that purchase products for the purpose of reselling them to ultimate consumers
        • Retailers add value—shopping convenience, services, and purchasing assistance to customers
        • Retailers create utility—time, place, possession, and form
      • Success in retailing comes from having a strong customer focus coupled with desired levels of service, product quality, and innovation.
  • 5.  
  • 6. Major Types of Retail Stores
    • General-Merchandise Retailers
      • A retail establishment that offers a variety of product lines
      • Department stores
        • Large retail organizations characterized by wide product mixes and organized into separate departments to facilitate marketing efforts and internal management
      • Discount stores
        • Self-service, general merchandise stores offering brand name and private brand products at low prices
  • 7. Major Types of Retail Stores (cont’d)
    • General-Merchandise Retailers (cont’d)
      • Supermarkets
        • Large, self-service stores that carry a complete line of food products, along with some nonfood products
      • Superstores
        • Giant retail outlets that carry food and nonfood products found in supermarkets, as well as most routinely purchased consumer products
  • 8. Major Types of Retail Stores (cont’d)
    • General-Merchandise Retailers (cont’d)
      • Hypermarkets
        • Stores that combine supermarket and discount shopping in one location
      • Warehouse clubs
        • Large-scale, members-only establishments that combine features of cash-and-carry wholesaling with discount retailing
  • 9. Major Types of Retail Stores (cont’d)
    • General-Merchandise Retailers (cont’d)
      • Warehouse showrooms
        • Retail facilities in large, low-cost buildings with large on-premise inventories and minimal services
      • Catalog showrooms
        • A form of warehouse showroom where consumers can shop from a catalog and products are stored out of buyers’ reach
  • 10. Major Types of Retail Stores (cont’d)
    • Specialty Retailers
      • Traditional specialty retailers
        • Also called “limited-line” and “single-line” retailers
        • Carry a narrow product mix with deep product lines (e.g., pet supplies)
        • Have higher costs and higher margins
        • Provide more product selection (first-line brands), product expertise, and high levels of personal service
  • 11. Major Types of Retail Stores (cont’d)
    • Specialty Retailers (cont’d)
      • Off-price retailers
        • Buy manufacturers’ seconds, overruns, returns, and off-season merchandise for resale to consumers at deep discounts
        • Charge less than department stores for comparable merchandise and offer few customer services
        • Have established long-term relationships with suppliers for continuing supplies of reduced-price goods
      • Category killers
        • Concentrate on a major product category and compete on the basis of low prices and product availability
  • 12. Direct Marketing
    • Direct Marketing
      • The use of telephone and nonpersonal media to introduce products to consumers, who then can purchase them via mail, telephone, or the Internet
      • A type of nonstore retailing
    • Nonstore Retailing
      • The selling of products outside the confines of a retail facility
  • 13. Direct Marketing (cont’d)
    • Catalog Marketing
      • A type of marketing in which an organization provides a catalog from which customers can make selections and place orders by mail, telephone, or the Internet
        • Consumer advantages are efficiency and convenience
        • Marketer advantages are lower location, facility, selling, and operating costs.
        • Disadvantages are inflexibility and limited selection and local service availability.
  • 14. Direct Marketing (cont’d)
    • Direct-Response Marketing
      • A type of marketing that occurs when a retailer advertises a product and makes it available through mail or telephone orders
    • Telemarketing
      • The performance of marketing-related activities by telephone
  • 15. Direct Marketing (cont’d)
    • Television Home Shopping
      • A form of selling in which products are presented to television viewers, who can buy them by calling a toll-free number and paying with a credit card
    • Online Retailing
      • Retailing that makes products available to buyers through computer connections
  • 16. Other Types of Nonstore Retailing
    • Direct Selling
      • The marketing of products to ultimate consumers through face-to-face sales presentations at home or in the workplace
        • Party plans: hosting groups to view a product demonstration and encouraging participants to purchase the products
      • Benefits
        • Personal attention to customer
        • Convenience of time and place of presentation
      • Limitations
        • High costs make it the most expensive form of selling
        • Negative consumer view of direct selling
  • 17. Other Types of Nonstore Retailing (cont’d)
    • Automatic Vending
      • The use of machines to dispense products
      • Can include items such as candy, chewing gum, soft drinks, cigarettes, newspapers, and coffee
        • Advantages: small amount of space needed and no sales personnel
        • Disadvantages: high costs of equipment and frequent servicing
  • 18. Franchising
    • Franchising
      • An arrangement in which a supplier (franchiser) grants a dealer (franchisee) the right to sell products in exchange for some type of consideration
        • Franchiser furnishes equipment, buildings, management know-how, and marketing assistance.
        • Franchisee supplies labor and capital and operates the business by the provisions of the franchise agreement.
  • 19.  
  • 20.  
  • 21. Major Types of Retail Franchises
    • Manufacturer Authorization
      • Product producer licenses retailers to sell its brand name product(s)
    • Distributor Authorization
      • Product producer licenses distributors to sell its brand name product to retailers
    • Producer Authorization
      • Franchiser supplies brand names, production techniques, or other services to franchisee while maintaining development and control of marketing strategies
  • 22. Franchising (cont’d)
    • Advantages
      • Enables startup with limited capital
      • Provides developed and proven business to franchisee
      • Attracts customers with established brand name
      • Allows immediate market entry
      • Motivates franchisee to succeed
    • Disadvantages
      • Control over aspects of the business and its operations by franchiser
      • Expense of continuing franchise royalties and advertising fees
      • Lack of control of franchisees by franchisor
  • 23. Strategic Issues in Retailing
    • Retail Store Location
      • Factors affecting location
        • Intended target market
        • Kinds of products
        • Suitability site for customer access
        • Characteristics of existing retail operations
    • Types of Locations
      • Free-standing structures
      • Traditional business districts
  • 24. Strategic Issues in Retailing (cont’d)
    • Traditional Shopping Centers
      • Neighborhood shopping centers
        • Usually consist of several small convenience and specialty stores.
      • Community shopping centers
        • Include one or more department stores (anchors), some specialty stores, and convenience stores.
      • Regional shopping centers
        • Have the largest department stores, the widest product mix, and the deepest product lines of all shopping centers.
  • 25. Strategic Issues in Retailing (cont’d)
    • Nontraditional Shopping Centers
      • Factory outlet malls
        • Feature discount and factory outlet stores carrying traditional brand name products
      • Miniwarehouse mall
        • Loosely planned; lease space to retailers running retail stores out of warehouse bays
      • Nonanchored malls
        • Do not have traditional department store anchors; combine off-price and category killer stores in a “power center” format
  • 26. Strategic Issues in Retailing (cont’d)
    • Retail Positioning
      • Identifying an unserved or underserved market segment and serving it through a strategy that distinguishes the retailer from others in the minds of consumers in that segment
    • Store Image
      • Atmospherics
        • The physical elements in a store’s design that appeal to consumers’ emotions and encourage buying
        • Interior layout, colors, furnishings, and lighting
        • Exterior storefront and entrance design, display windows, and traffic congestion
  • 27. Strategic Issues in Retailing (cont’d)
    • Scrambled Merchandising
      • The addition of unrelated products and product lines to an existing product mix, particularly fast-moving items that can be sold in volume
      • Intent of scrambled merchandising
        • Convert stores into one-stop shopping centers
        • Generate more customer traffic
        • Realize higher profit margins
        • Increase impulse purchases
  • 28. Strategic Issues in Retailing (cont’d)
    • The Wheel of Retailing
      • A hypothesis holding that new retailers usually enter the market as low-status, low-margin, low-price operators but eventually evolve into high-cost, high price merchants.
    Maybry’s at the Mall
  • 29. The Wheel of Retailing FIGURE 17.1 Source: Adapted from Robert F. Hartley, Retailing: Challenge and Opportunity, 3rd ed ., p. 42. Copyright © 1984 by Houghton Mifflin Company. Used by permission.
  • 30. After reviewing this chapter you should:
    • Understand the purpose and function of retailers in the marketing channel.
    • Be able to identify the major types of retailers.
    • Recognize the various forms of nonstore retailing.
    • Have examined the major types of franchising and the strengths and weaknesses of franchising.
    • Have explored strategic issues in retailing.